Verdienstbescheinigung & Lohnabrechnung: Everything you need to know about earnings statements & payslips in Germany – firma.de (2024)

Contents

Do employers have to issue a payslip (Lohnabrechnung)?

Yes, section 108 of the GewO (trade regulation act) requires every employer to issue a Lohnabrechnung (payslip or salary statement). The payslip is used by the employee to check and understand the payment received. However, the employer is not obliged to issue a payslip in two specific cases:

1. If no payment is made to the employee, and
2. if the wage remains the same in each pay period. In the latter case, the employer only needs to issue a payslip for the initial pay period, and then only if there are any changes in data or amounts.

Of course, employers don’t have to do payroll accounting and prepare payslips in-house but outsource to a service provider if they prefer not to.

Why do I need a payslip?

As well as the importance of checking and keeping your payslips, they also serve another important purpose. When lenders, landlords or other contractors need proof of your income to assess your creditworthiness, they will always ask for payslips. This is because they take into account not only your credit score from Schufa (credit reference agency) but also your current salary or wage.

What if I haven’t received a payslip from my employer?

If you haven’t received a payslip from your employer and the two cases above don’t apply to you, you should write a short, informal letter to your employer asking them to provide you with a payslip.

Incorrect payslip, insufficient payment – what to do?

Receiving an incorrect payslip that results in lower pay is unpleasant for employees and can have consequences for employers. However, there are steps employees can take to address the problem before it escalates. Start by carefully calculating your payslip and comparing it to accurate records from the past. Are there any incorrect dates? Has the wrong tax bracket been used? Has the employer calculated the hourly rate incorrectly? Once you have checked everything thoroughly, the next step is to contact your employer.

The quickest and most effective way to correct errors on a payslip is to submit a dispute in writing. In general, you have three years before the statute of limitations expires. However, be aware of any individual exclusion periods in your contract, as these can significantly shorten the period! Write a short, informal letter stating which payslip you are contesting and why. Set a reasonable deadline of 14 days for your employer to correct the payslip. By raising your concerns about the incorrect payslip, you will have proof that you brought the error to your employer’s attention. If your employer does not respond to this letter, you can take further action, such as claiming reminder fees, account maintenance fees or similar charges incurred as a result of the incorrect pay.

What happens if I’ve been paid too much?

If you’ve been overpaid, here’s what can happen: The employer is responsible for the correct payment of income tax and can ask you to repay the overpayment. The same goes for social security contributions, which the employer can deduct from your pay, but only within three months after the payroll.

Does my employer have to send me the payslip?

Actually, no. While employers are responsible for creating the payslips, they’re not required to deliver them to employees. Instead, it is the employee’s responsibility to collect the payslips from the employer. There is no obligation to send the payslips.

Verdienstbescheinigung (earnings certificate) – is this an employer obligation?

Yes, the employer must send a Verdienstbescheinigung (certificate of earnings) electronically or complete a certificate for the authorities. This obligation applies if an employee needs an earnings certificate issued by the employer, e.g. for the child supplement, the application for unemployment or housing benefit, maternity benefit, transitional allowance, the search for housing or also for the granting of a loan by a bank. The issuing of an earnings certificate is an employee right.

What are the “vermögenswirksame Leistungen” (capital-forming benefits) on my payslip?

In addition to wages and salaries, employers can also provide capital-forming/savings benefits (in German this is vermögenswirksame Leistungen or VWL or VL for short). Provided that the employee’s annual income is below a certain level, he or she receives a savings bonus from the state at the end of the year. This limit varies according to the purpose of the investment; for example, if the money is invested for housing, the income limit is €17,900 or €35,800 (single or married); for the savings allowance for asset shares (equity funds), the limit is €20,000/€40,000.

The employer can either pay the capital-forming benefits directly to the employee (e.g. into a current savings contract) or pay them in addition to the salary. If the employer chooses not to pay it on top of the salary, the employees can request in writing that part of their salary be invested in capital formation, as every employee has a right to capital formation. It is up to the employer to decide whether or not to subsidise capital formation.

Capital formation benefits are tax-free if they are less than €360 per year. They are even exempt from contributions if they are not invested by the employer but paid to employees in addition to their salary. Capital formation benefits are intended to encourage employees to save or invest money. In the payroll, capital-forming benefits increase the taxable gross salary.

What does a payslip for a fixed-term contract look like?

The payslip for a fixed-term contract is almost identical to that for a permanent contract. The only difference is that the leaving date is shown on the payslip.

What does “Aufrollungsdifferenz” mean on my payslip?

If an employee has not been paid for a previous month, this will show up on a later payslip under the term Aufrollungsdifferenz (recalculation difference). The recalculation difference is the difference between the usual, actual remuneration and the new remuneration added to the amount paid in arrears. A recalculation difference can be a bonus payment that could only be determined at a later date, or it can be a retroactive salary payment or a correction to a previous payroll. The recalculation difference must be taxed as soon as it arises. This may affect the employee’s net pay, increasing or decreasing it.

How does a Fahrtenbuch (driver’s logbook) affect my payslip?

A Fahrtenbuch (driver’s logbook) is used to record the private use of a company car. These usage values are converted and end up as geldwerter Vorteil (imputed income) on your payslip. A non-cash benefit is also known as a benefit in kind as it goes beyond the regular remuneration and is not paid in cash. However, by deducting them from wages, employees receive these benefits more cheaply than if they had to buy them at the normal price.

Do I need my payslips to file my tax return?

As of 2017, there is no longer an obligation to submit receipts (what’s called a Belegvorlagepflichtin Germany), but there is an obligation to keep receipts (the German term for this is Belegvorhaltepflicht). This means that employees no longer need to attach receipts to their tax returns (Steuererklärung). However, if the tax office wants to check some of the information, you should still have your receipts ready. However, the payslip is not one of the documents that may be required. The tax office will only need supporting documents, such as bank statements, to check the remuneration you have received. Nevertheless, hang on to your payslips in case you need them.

How is company health insurance calculated?

If the employer wants to introduce a company health insurance scheme (in Germany this is called betriebliche Krankenversicherung, or bKV for short). There are two ways in which contributions can be paid:

• geldwerter Vorteil/Sachlohn/Sachzuwendung (non-cash benefit/pecuniary benefit/remuneration in kind), or
• Barlohn (cash wages)

Contributions to company health insurance are generally taxable. If company health insurance is provided as a benefit in kind, employees benefit from the €50 exemption threshold. If the limit is exceeded, the entire contribution is taxable.

The premium must be taxed if the insurance premiums are declared as cash wages or if the €50 threshold is exceeded. There are three different taxation models for company health insurance:

• Individuelle Besteuerung (individual taxation)
• Pauschalversteuerung (flat-rate taxation)
• Nettoversteuerung (net taxation)

Individuelle Besteuerung (individual taxation)

For the purposes of personal taxation, contributions to the supplementary insurance scheme are regarded as cash remuneration. This means that supplementary insurance premiums are added to other earned income and are subject to tax and social security contributions.

Pauschalversteuerung (flat-rate taxation)

This flat-rate taxation allows all the employees concerned to be grouped together, which means that the total payroll tax due is calculated at a single rate. Also, employees only have to pay their share of the contributions if the employer doesn’t offer to pay it. Any remaining costs of the lump-sum taxation are borne by the employer.

As the employer doesn’t have to make an individual calculation for each employee this means they can benefit from a lower tax burden than with individual taxation.

Nettoversteuerung (net taxation)

Under net wage taxation, employees receive a salary increase on top of their current gross salary. In addition to the net insurance contributions to the health insurance scheme, the additional social security contributions and income tax is also included in this salary increase.

In this model, the employer pays for the additional financial burden on the employee. The administrative effort is not exceptionally high, as the model is very easy to understand for both sides. In contrast to lump-sum taxation, the bonuses must be calculated individually for all employees.

How does unpaid leave affect a payslip?

If you have asked for unpaid leave because, for example, a family member has fallen ill, you want to take a sabbatical or you need to look after your sick children, your payslip for the current month will of course also be adjusted. If your unpaid leave lasts longer than four weeks, you will not receive a payslip for the whole month you are absent, as you will not be paid during your unpaid leave. Your employment will be ‘paused’. You should make sure that your insurance coverage expires within four weeks of the start of the unpaid leave and that your employer deregisters you so you stop being liable for social security or health insurance contributions.

Want to know more?

Payroll (Lohnabrechnung & Gehaltsabrechnung):

• Get to know all about wage tax
• All the payslip abbreviations explained
• How to read a German payslip
• The non-wage labour costs

All accountancy-themed articles:

• Master List: Accountancy